Massachusetts Attorney General Martha Coakley is expected today to sign on to a settlement brokered by attorneys general nationwide with five major US lenders over the banks’ role in the country’s foreclosure crisis, according to a person with knowledge of the discussions who was not authorized to discuss the deal publicly.
Coakley and her staff have been negotiating for days with lenders over the pact, which has been months in the making. Massachusetts is one of only a few states that have yet to agree to the settlement, which reportedly could total between $25 billion and $30 billion. The money is being promised by Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citibank, and Ally Financial Inc.
California and New York agreed to sign the deal yesterday. The settlement would go toward lowering some homeowners’ mortgage balances, loan refinancing, a reserve account, and cash payments of about $2,000 apiece to some of those who lost their properties through improperly conducted foreclosures.
California — where more than 2 million people owe more to banks than their homes are worth — would reportedly get $430 million. Florida would receive $350 million, and Texas is expected to get about $141 million.
It is unclear how much money would go to Massachusetts, where the foreclosure problem, while serious, has been much less severe than in other parts of the country.
Coakley, who was not available for comment last night, has said she was reluctant to accept the agreement on behalf of the state because she feared it would not provide enough help to troubled homeowners or allow her to pursue claims related to unlawful foreclosure practices in Massachusetts.
But according to the person close to the negotiations, the state was told yesterday it could sign on to the pact without giving up its right to litigate other issues related to the five lenders and how they conducted foreclosures.
In December, Coakley — frustrated with the slow pace of the national negotiations involving other state attorneys general — sued the five major banks, alleging they illegally took back properties, filed fraudulent foreclosure documents, and failed to assist borrowers who could have stayed in their homes if they had been allowed to make lower monthly mortgage payments.
She also sued Mortgage Electronic Registration Systems, the private Virginia lender-created company, claiming it was set up to let lenders to avoid state requirements that they recordmortgage transfers.
Coakley also alleges that the system conceals the true identity of mortgage holders.
Under terms of the tentative agreement, Coakley apparently will still be able to pursue claimsagainst MERS and allegations that banks completed foreclosures in Massachusetts withouthaving the proper paperwork.
Earlier this week, Iowa Attorney General Tom Miller, who is leading the negotiations, saidsome issues still need be to be worked out by federal, state, and bank officials before a deal is finalized.
Housing advocates said the agreement, while useful, will not solve the country’s foreclosurecrisis.